Mr. THOMPSON. There were a good many times when people on the staff did not agree with some of the economic theories of Dr. George Stocking. I particularly recall that. Mr. EISENBERG. I missed the last part of your answer. Mr. THOMPSON. I particularly recall that. Mr. EISENBERG. Would you turn now to a document dated May 26, 1941, a memorandum: Re negotiation looking toward settlement of antitrust and pipeline litigation against the oil industry? Mr. THOMPSON. What kind of a document is it? I don't readily find it, and we have identical books. Mr. EISENBERG. It is among the documents you furnished us. Mr. THOMPSON. I say, "Whereabouts in the book?" I have got it, all right. Mr. EISENBERG. It is in the second book, the same book you were just looking at. Mr. THOMPSON. I have got it. Mr. EISENBERG. You have it now. Now that memorandum states that by May 20, 1941, a draft of all matters of substance Mr. THOMPSON. May I ask where it states this; what page? Mr. THOMPSON. I have got it. Mr. EISENBERG. By May 20, 1941, a draft of all matters of substance excepting only certain phases of pipeline operation had been tentatively agreed to. Now, all I would like you to do for us is locate the document you are referring to as being a draft settlement of all matters of substance except the pipeline matters. Why don't you do that after you conclude the testimony and advise us. Mr. THOMPSON. I can tell you right now. It immediately precedes in the book which you have the memorandum to which you referred and which is for purposes of identification 30 pages long. Mr. EISENBERG. It is the immediately preceding document? Mr. THOMPSON. It is dated May 20, 1941, and in my handwriting you will find on it "Industry draft." I am quite sure that is the draft to which the memorandum refers. Mr. EISENBERG. Now on page 6 of this memorandum Mr. THOMPSON. Wait a minute, I have to find the memorandum again. This is the memorandum "Re Negotiations Looking Toward Settlement of Antitrust," is that the one you are talking about? Mr. EISENBERG. May 26, 1941. Mr. THOMPSON. Dated May 26 in longhand on the first page? Mr. EISENBERG. Now page 6 of this memorandum indicates that the negotiation committee reconvened with Judge Arnold on May 21, 1941, at which time the negotiating committee pointed out to him the impracticalities and inconsistencies of the position taken by the Department's staff. Just tell us as far as you recall: Was this a private conference with Judge Arnold or were other members of the Department of Justice's staff present at the conference? Mr. THOMPSON. I have to locate what you are referring to, because I can't find it. You say this is page 6. Might I look at your copy and then I might save time, at the page you are looking at. It says the negotiating committee reconvened with Mr. Arnold on May 21? Mr. EISENBERG. Yes. Mr. THOMPSON. And pointed out to him Mr. EISENBERG. What I was interested in knowing is whether the industry committee was meeting privately with Mr. Arnold during the same time it was negotiating with Mr. Arnold's negotiating committee. Mr. THOMPSON. No. Mr. EISENBERG. That is the point of the question. Did you have private sessions with Mr. Arnold in addition to the regular sessions you had with this committee? Mr. THOMPSON. No, sir; I don't think we ever saw Mr. Arnold without the key people in the staff present. Mr. EISENBERG. So that when you were pointing out the impracticalities and the inconsistencies of the staff's position, you were doing it in the presence of the staff, as far as you recall? Mr. THOMPSON. Yes. I think I was probably taking a crack at Dr. Stocking. I certainly didn't agree with any of his ideas. Mr. EISENBERG. At page 8 of your statement, the statement you submitted to the committee Mr. THOMPSON. Page what? Mr. EISENBERG. I am talking about the statement which you have submitted to the committee today. Mr. RODINO. On page 8. Mr. THOMPSON. Yes, sir. Mr. EISENBERG. You indicate that by May 28, 1941, considerable progress was made toward the phrasing of an economic type of decree under which the industry might have lived. However, on page 6 of the memorandum we have just been discussing, the memorandum dated May 26, 1941, you indicate that after this conference with Judge Arnold on May 21, the negotiating committee withdrew from further conferences and stated that developments would promptly be reported to the industry. Isn't there some inconsistency between your statement today and what is reflected in this may 26 statement as to the status of the negotiations at that time? Mr. THOMPSON. I don't think so, sir, because the May 28 date was put in there because it was the date on which President Roosevelt declared the unlimited emergency, and it wasn't supposed to be the date we stopped negotiating, or something like that. It was just a reference date. A whole lot of progress had been made. Mr. EISENBERG. Let's look at the memorandum dated June 4, 1941, which is I believe the next document in the exhibits you have furnished us. Doesn't that also state that as of that date, which was very shortly after the May 28 date referred to in your statement, two radically different drafts of a consent decree were in existence? Mr. THOMPSON. Yes, sir. That doesn't mean a lot of progress hadn't been made. A lot of progress had been made. Mr. EISENBERG. Even though you were still in the situation where there were two radically different drafts of the consent decree? Mr. THOMPSON. Yes. Mr. EISENBERG. You are characterizing that as a situation in which a lot of progress had been made? Mr. THOMPSON. Mr. Eisenberg, we had been talking for 4 months. Mr. RODINO. I think you can characterize talk as progress sometimes. Mr. THOMPSON. I think so. Mr. EISENBERG. Let's turn now to the situation that existed in November of 1941. I believe the documents for that period are in the third book. Mr. THOMPSON. Yes. Mr. EISENBERG. I believe in your statement you referred to several conferences between December 9 of 1941 and December 24 of 1941, of which there is no indication in this record you have furnished us. When I mentioned this to you yesterday, you said you would check your correspondence file and determine if you had any additional documents which would fill in that gap. Have you discovered any such documents? Mr. THOMPSON. Yes, sir. It isn't a question of discovery. They were in the correspondence file which I offered to show you. They are right here. Mr. EISENBERG. I wonder if you would be willing to submit those for the record. Mr. THOMPSON. Surely. Mr. EISENBERG. So that we can include them among these exhibits. Mr. THOMPSON. From what date? Mr. EISENBERG. Would you like to make copies? Mr. THOMPSON. Since this is apparently the only file which discloses the history of this whole thing, I would very much prefer to take them back to my office, photostat them, and send them to you. Mr. RODINO. That will be fine. Mr. THOMPSON. I will do that with great pleasure. Mr. EISENBERG. I have no further questions. Mr. RODINO. There are just 2 or 3 more questions from Mr. Harkins. Mr. THOMPSON. Yes, sir. I hope he is going to argue law with me. Mr. RODINO. NO; I am afraid that there is little time to argue any law right at this time. Mr. HARKINS. Mr. Thompson, with respect to the national defense pipeline, are not these arrangements contained in the document that was signed on September 5, 1941? Did that not in essence amount to an agreement among the 11 major refiners on the east coast to prorate the capacity of this pipeline on the basis of their 1940 refinery positions on the east coast? Mr. THOMPSON. Mr. Harkins, I am not sure. May I check with you whether you have got a final copy. I brought down one from my file which has been signed by one of the participants. Let's just check whether you have got the proper document. We might just check it by looking at the bottom of page 12. Mr. HARKINS. Mine is different from yours. Mr. THOMPSON. Then I think we should substitute this in the record. This just happens to be one that was pulled out of my staff signed by the Shell Oil Co. Would you mind returning it to me; not today necessarily? This is a dead duck, as you know. Mr. HARKINS. I know, sir. I would offer it for the record and it would be printed. I could have copies made of it. Mr. THOMPSON. I think what you have got is a draft. I have got additional copies of that which I can lend to you, but I want to get that back because it happens to be a signed copy. Mr. HARKINS. All right. If we could proceed here, would you agree that the answer to my question is in the affirmative? Mr. THOMPSON. Would you mind repeating it, Mr. Harkins, because I am not clear. Mr. HARKINS. That the signatories to the document signed dated September 5, 1941, agreed to prorate the throughput of this pipeline on the basis of their east-coast refinery position in 1941? Mr. THOMPSON. That, sir, is too casual a description of it. Mr. HARKINS. How would you characterize it, sir? Mr. THOMPSON. Precisely the way I did in an accurate summary which is contained in my statement. May I refer to that? Mr. HARKINS. I do not wish to prolong this, but this document speaks for itself. Mr. THOMPSON. Certainly. Mr. HARKINS. Would you say that the 1940 east-coast refinery position was a subject contained in this document? Mr. THOMPSON. Yes, sir; not only with respect to the companies which were participating, but with respect to all marketing companies on the east coast, and everybody was to have his pro rata share, major/independent alike. Mr. HARKINS. Yes, sir. Now, in other words, this document would crystallize, if it had gone into effect, the 1940 east-coast marketing position of the industry; is that right? Mr. THOMPSON. Not marketing position, sir; crude supply position. Mr. HARKINS. I accept your correction. That was something that was under attack in the API case, was it not? Mr. THOMPSON. Yes. Mr. HARKINS. One of the conditions for these arrangements for the national-defense pipeline going into effect was contained in (d). I would like to read it to you: Decreed in the District Court of the United States for the District of Columbia, entered in the Matter of United States of America vs. American Petroleum Institute, et al. Civil Action 8524 wherein it is adjudged and decreed that the concerted activities of the parties hereto and hereinafter set forth are not in violation of the antitrust or other laws of the United States. Mr. THOMPSON. Yes. Mr. HARKINS. This agreement about the national-defense pipelines, was it not, was conditioned on a consent decree that would legitimize activities that were under attack in the API case? Mr. THOMPSON. Yes. Mr. HARKINS. And the industry refused to build such a pipeline without such an agreement? Mr. THOMPSON. The lawyers who permitted the industry without such a condition to build that pipeline should have had their heads examined. Mr. HARKINS. Mr. Chairman, I offer this for the record. 98505-58-pt. 1, vol. 2 -31 (The matter referred to is as follows:) AGREEMENT NATIONAL DEFENSE PIPELINES, INC. AGREEMENT entered into this 5th day of September, 1941, by and among Standard Oil Company (New Jersey), Consolidated Oil Corporation, Sun Oil Com pany, The Atlantic Refining Company, Cities Service Company, Socony-Vacuum Oil Company, Incorporated, Tide Water Associated Oil Company, The Texas Corporation, Shell Oil Company, Incorporated, Gulf Oil Corporation, PanAmerican Petroleum & Transport Company, and such other companies as may, subsequent to the date hereof, become parties hereto in the manner hereinafter set forth. Any commitment hereinafter undertaken by any party may be performed in whole or in part by a subsidiary or parent company of such party. Similarly any right granted to any party may be exercised by or assigned in whole or in part to such parent or subsidiary company. This Agreement is entered into and under the authority and pursuant to the provisions of the Act of Congress entitled "An Act to facilitate the Construction, Extension or Completion of Interstate Petroleum Pipe Lines Related to National Defense and to Promote Interstate Commerce" approved July 30, 1941 and shall become effective if there shall have been promulgated or received within ninety days after the date of execution hereof: (a) A Proclamation of the President of the United States issued under and pursuant to the authority of said Act of Congress declaring his finding that the pipelines hereinafter more specifically described are necessary for National Defense purposes and prescribing, subject to the provisions of Section 8 (a) of said Act, the terms and conditions under which said lines shall be constructed, completed, owned, operated and maintained, and finding that it is necessary for national defense purposes for the corporations hereinafter proposed to be organized to exercise the right of eminent domain in accordance with Section 3 of said Act; (b) A written recommendation from the Petroleum Coordinator for National Defense addressed to the above mentioned parties, requesting that the pipelines hereinafter described be constructed, completed, owned, operated and maintained in the manner hereinafter set forth, an executed original of which shall be made a matter of public record by the filing of the same in the National Archives of the United States and the printing of the same in the Federal Register; (c) The approval of the general character of all activities hereinafter set forth, by the Assistant Attorney General of the United States in charge of the Anti-Trust Division in accordance with the procedure set forth in the letters of the Attorney General of the United States to the Secretary of the Interior dated June 3, 1941 and June 18, 1941, and his letter to the General Counsel of the Office of Production Management dated April 29, 1941, and incorporated by reference in said letters to the said Secretary. (d) A Decree of the District Court of the United States for the District of Columbia entered in the matter of United States of America v. American Petroleum Institute, et al, Civil Action No. 8524, wherein it is adjudged and decreed that the concerted activities of the parties hereto hereinafter set forth are not in violation of the Anti-Trust or other laws of the United States. 1. Organization of corporations to construct and operate pipeline facilities The parties agree to organize a corporation under the laws of the State of Delaware to be known as National Defense Pipelines, Inc., (or by such other name as may hereafter be selected) for the purpose primarily of constructing. completing, owning, operating and maintaining the following facilities for the transportation of crude oil: (a) 22" pipeline originating in the vicinity of Brightstar, Arkansas, nes? the Texas border and extending in a northeasterly direction to a point near Salem, Illinois; (b) From junction near Salem, Illinois, 24" pipeline to be constructed to the Bayonne and Philadelphia areas, with branches to refining centers: (c) 16" connecting line from Salem to Wood River, Illinois, to tap the presently existing facilities now carrying oil from Oklahoma, Kansas, Texas, Mid-Continent and Illinois areas; (d) Necessary tankage, pumping stations, and equipument to deliver at aggregate of 250,000 barrels of oil daily to terminal points in the Bayonne and Philadelphia areas. |